Question

Malcolm is working full-time and wants to make sure he's saving strategically for four specific goals: an emergency fund ($5000), a flight home to see his parents for the holidays ($450), a downpayment on a new car ($3000), and his retirement (2% of his monthly take-home pay). What's his best strategy?
1

Answer 1

Answer: c. Set up 3 separate savings accounts for the first 3 goals and a retirement investment for the 4th

Step-by-step explanation:

The options are:

a. Put as much as he can every month into an investment, like shares of a company, so his money grows quickly

b. Keep all the money in his checking account so that he can spend it in the different categories as needed

c. Set up 3 separate savings accounts for the first 3 goals and a retirement investment for the 4th

d. Set up 4 separate savings accounts

Based on the information given in the question, the best startegy for Malcolm is to set up 3 separate savings accounts for the first 3 goals and a retirement investment for the 4th.

Since the first three goals include saving for an emergency fund ($5000), saving for a flight home to see his parents for the holidays ($450), and a downpayment on a new car ($3000), the best thing he should do is to set up 3 savings account for the first three goals.

The last goal relates to his retirement which is 2% of his monthly take-home pay, therefore he should set up a retirement investment for the 4th goal.